America's power play

Solar company takes on China—and US rivals

SolarWorld has angered U.S. rivals and may have drawn retaliation from the Chinese government for fighting what it calls China's "systematic campaign" to undermine the U.S. solar industry. But apparently, it's not done fighting yet.

This week, the Justice Department indicted five purported Chinese military hackers for alleged economic espionage, saying that most of the U.S. companies supposedly attacked by hackers were actively defying China's government on trade issues. Among the companies targeted, the Justice Department says, is SolarWorld, a German-owned firm that is the biggest solar panel maker in the United States.

SolarWorld's manufacturing plant in Hillsboro, Oregon.

SolarWorld has a history of taking on Chinese trade practices, and now the company is at it again: It's pushing for new tariffs against Chinese solar firms that it says are using a loophole in an earlier ruling in order to continue dumping panels into the U.S. below market value. SolarWorld was also the petitioner in that first tariff ruling, which came down in 2012.

"The government-underwritten Chinese solar industry has decimated much of the solar manufacturing industry on several continents, including the Americas," Ben Santarris, strategic affairs director for SolarWorld America, wrote in an email to CNBC. "Many U.S. companies have shut down production, costing the jobs of hundreds of Americans."

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Devon Cichoski, a spokeswoman for SolarWorld America, took the charges a step further, telling CNBC that the hacking is "yet another example of the Chinese government's systematic campaign to seek unfair advantage in the U.S. and global solar industry."

However, many SolarWorld rivals in the U.S. have been loath to embrace SolarWorld's petitions for increased tariffs, and an organization called Coalition for Affordable Solar Energy (CASE) has sprung up "united in the belief that SolarWorld's actions will kill jobs in the U.S. economy while raising the price of solar energy," according to its website.

CASE boasts more than 90 solar industry firms as members, including billionaire entrepreneur Elon Musk's SolarCity.

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SolarWorld produces and installs its own panels, controlling every step of its supply chain. But many other U.S. companies choose to specialize, producing the basic silicon building blocks, building the individual cells that make a panel, or just installing pre-made panels.

Many of those companies will suffer if tariffs are levied on Chinese manufacturers, according to George Hershman, a division manager for Swinerton Renewable Energy, a CASE member. He said his group does not support a legal petition on Chinese trade practices when other steps could be taken that won't damage other sectors of the U.S. solar economy.

"We just think that handling this through the Department of Commerce is a broad-reaching approach to an issue," he said. "The industry ... recognizes that a settlement is a better solution."

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Chinese manufacturers found a way to avoid the 2012 tariffs by simply outsourcing solar cell production to Taiwanese factories, Santarris said. About 70 percent of all Chinese solar imports in the U.S. market now employ that strategy, he added.

With its new petition, SolarWorld America has opened itself up to a new wave of criticism, both from abroad and at home.

Rhone Resch, president and CEO of the Solar Energy Industries Association, said in a February statement that "if imposed, the tariffs sought by SolarWorld … could result in a sharp increase in the cost of solar energy in the United States. It's time to end this needless saber rattling."

Solar: Will it power the planet?
Solar: Will it power the planet?

Swinerton has already seen its solar projects affected by SolarWorld's petition, Hershman said. It's unable to initiate some projects, he said, because suppliers cannot give price assurances for beyond June 2, when a preliminary ruling is expected by the Commerce Department on the dispute. If Swinerton runs out of solar products, "hundreds of construction workers" will not go to work, Hershman said.

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Even former New York City Mayor Michael Bloomberg, the current United Nations special envoy on cities and climate, criticized solar product tariffs. He said in April that these policies were the result of protectionist impulses from self-interested corporations, and that "if the Chinese want to support our economy, send it in, babes."

SolarWorld's Santarris took issue with that line of reasoning.

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"It is cynical to argue that by asking the U.S. government to apply the laws enabling fair and free trade, SolarWorld is doing anything other than promoting competition and all of its benefits, including higher efficiencies and lower prices," he said.

In an open letter to President Barack Obama earlier this year, SolarWorld founder and CEO Frank Asbeck called CASE "a public-relations construct largely funded by the Chinese producers."

Swinerton's Hershman disagreed, saying the "lion's share" of CASE members are U.S.-based.

A SolarWorld commercial project in New Jersey.
Source: SolarWorld

Chinese firms have clearly lowered the prices of solar products worldwide and hurt European and American solar panel manufacturers in the process, said said Shayle Kann, senior vice president at Greentech Media, which produces green technology research. But it remains a matter of debate whether those actions are illegal, he said.

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As for the fate of SolarWorld's petition, Kann said it's anyone's guess. Because it involves multiple countries—China and Taiwan—and products beyond the solar cells covered in the 2012 ruling, any Commerce Department decision could take on a wide range of forms, he explained. But no matter the decision, Kann said SolarWorld's current petition will mark the end of the formal solar trade disputes in the U.S for some time.

"This particular case will create a resolution one way or the other, and there won't be new cases beyond this one," he said. "There isn't a lot more [SolarWorld] could do."

—By CNBC's Everett Rosenfeld